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Allegations of agency are no longer a quick out for third party claims

In Paramount Resources v. Import Tool Corporation Ltd., 2018 BCSC 599, the Court granted leave to file a third party notice despite objection from the proposed third party who argued that it was an agent of the plaintiff, and/or that the allegations against it were more properly defences against the plaintiff’s claim. This has been an increasingly common basis on which parties try to resist/prevent third party claims.

The defendant seeking leave had supplied well liner hangers for a hydrocarbon well. A liner hanger became stuck during installation. The third party was retained by the plaintiffs to remove the liner hanger. While attempting to remove the liner hanger, the third party knocked it to the bottom of the well, rendering it unusable.

The Court held that it was not apparent on the pleadings that the third party was an agent of the plaintiffs. The Court noted that it was alleged that the third party was actively negligent in attempting to remove the liner hanger, and this could not necessarily be imputed to the plaintiffs. The issues between the defendant seeking leave and the proposed third party were substantially the same as those related to the plaintiffs’ claims, and the subject matter of the action, and therefore the third party claim should be and was allowed.

This decision is helpful to clarify when leave to file a third party claim is likely to be granted in similar circumstances. It appears that leave will be refused only in the clearest cases. This is consistent with the goals of the Supreme Court Civil Rules, and the purpose of third party proceedings.

Case law summary by Tim Wedge